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High-value homes pose challenges to city, county assessors

FARGO -- In 1974, the home with the highest assessed value in the Fargo-Moorhead area was on Fargo's Country Club Drive.

The residence owned by Warren and Irene Diederich, the family that started Industrial Builders, was worth $105,000.

Today, 37 years later, the home with the highest assessed value belongs to Kay and Ahmed Abdullah, who live in Fargo's Rose Creek neighborhood.

It's worth $1.8 million.

How do assessors come up with a figure like that?

"The appraisal process is a matter of trying to gather as much information as you can that may lead one to an informed decision of the possible sale value of a property," said Ben Hushka, Fargo city assessor.

He said the process is two-pronged, with sales of similar homes providing the best measure.

Assessors also make decisions based on what it may cost to build a home of "comparable utility," according to Hushka, who said that approach often comes into play when dealing with one-of-a-kind homes.

A main reason: Very few existing homes valued at $1 million or more are sold in the area.

For as long as the Fargo-Moorhead Area Association of Realtors has been keeping records of its multiple listing service, only three closings have been completed for homes of $1 million or more, according to LuAnn White, association president.

"A lot of that market probably doesn't even come through (on the multiple listing service)," she said.

"I think what happens is people who have the ability to invest $1 million in their home, they probably go directly to a builder," White added.

She said a recent search of the multiple listing service showed just one existing home on the market with a price tag of more than $1 million.

Another search showed that of 1,154 active listings in the Fargo-Moorhead area, 24 carried price tags of $500,000 or more.

About two dozen households with assessed values of $1 million or more were contacted for this story.

Most didn't respond.

Of the few property owners who did, many said they didn't want attention drawn to them or their homes.

Nationwide, homeowners can be hesitant to allow even assessors onto their property, according to Hushka, though he added his office doesn't run into that very often.

"There is no law in North Dakota that requires people to let us on the property. Most do," he said.

"If we can't (get on the property), we have to make assumptions. You have to assume that certain things are finished to a certain quality level," Hushka said.

"Generally, if people appeal their assessment, that opens the property to assessment," he added.

The size of a home is a major part of an appraisal, but special features and the materials used also make a difference, according to Hushka, who said indoor running tracks and gyms are some of the things he sees when putting a value on a high-end home.

Houses in the $200,000 to $300,000 range "are not quite large enough to have a lot of that," he added.

According to city records, property taxes on some million-dollar homes in Fargo top $30,000 a year.

For some of the homes, assessed values have not risen much, if at all, since 2004.

Hushka said that is likely because there have been few sales of similar-type homes to base an increase on.

Appreciation has not been a problem for other segments of the Fargo housing market.

Remember that house on Country Club Drive that was valued at $105,000 in 1974?

It is now worth $446,900.

The median home value in Fargo now stands at about $190,000, meaning half of the homes in the city are valued higher and half are valued lower, according to Hushka.

But such home values pale in comparison to houses at the top end, where owners may spend as much on cabinets as others pay for their entire house.

Hushka said assessors attend workshops to prepare themselves for tackling the particular challenges of high-end homes.

He said part of his job is not being dazzled by what he might find in a house.

"I'm not here to be wowed. I'm here to gather the data and do the best I can with it," he said.